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The markets have been making surprise gains today, with the benchmark Sensex rallying about 400 points and the rupee strengthening to below 61 against the US dollar in intraday trades.

Here's what could be driving the rally in both currency and stock markets.

Good economic numbers from China

China GDP rose 7.8 per cent in the third quarter year on year, up 2.2 per cent quarter on quarter. September industrial output rose 10.2 per cent year on year. Retail sales for the same month rise 13.3 per cent year on year. The country's stats bureau said the economy is showing trend of steady improvement.

Japan's rating affirmed

S&P has affirmed Japan's ratings at AA-/A1+, though the outlook is negative. This comes as a positive as far as Asian markets are concerned.

"This rally is partly attributable to the fact that no one expected the rally to continue, no one expected the market to recover. So clearly the market had a greater opportunity to make a comeback, but now as we are reaching to higher levels, there is a sense of optimism coming among investors. If we divide the investors into global investors and local investors, clearly global investors are far more bullish on India," says Nilesh Shah, Director, Axis Direct.

QE tapering

The US has decided to hike the debt ceiling. This means that QE tapering is not happening this year at least.

"Investors are finding Delhi better from their respective places. When a large power house like the US shuts down 18 times over the last 30 years or they raise that debt ceiling limits by 60 times over the last 80 years, clearly it shows that there are many other countries which are in far worse shape than we are," says Nilesh Shah.

A surprise rally?

"Today's move really has been a bit surprising, especially given the kind of underperformance and profit-booking that we we seeing over the last 2-3 days. I continue to hold the view that we have to look at the Nifty sustaining well beyond the 6,120-6,140 kind of range to think whether this trend is for real," says Tushar Mahajan, Head of Derivatives (Head of Listed Futures & Options, India), Nomura.